For the first time since November 2005, existing-home sales rose compared to the prior year, NAR reported this morning. Sales of existing homes rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million units in July from 4.89 million units sold in June, and they were 5.0 percent above the 4.99 million-unit pace in July 2008. This marks the largest monthly sales gain in 10 years, and the fourth straight month that home sales have increased compared to the prior month.
“The housing market has decisively turned for the better,” says NAR chief economist Lawrence Yun.
Stronger sales were driven by falling home prices, with the national median existing-home price falling 15.1 percent in July from a year ago, to $178,400. Distressed sales, including foreclosures and short sales, accounted for 31 percent of all transactions last month. Housing inventory rose 7.3 percent at the end of July to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace.
Three of the nation’s four regions reported strong monthly and annual sales gains. Sales rose 13.4 percent in the Northeast in July to an annual pace of 930,000 and were 3.3 percent higher than July 2008. In the Midwest, sales increased 10.9 percent in July to 1.22 million and were 8.0 percent above a year ago. In the South, sales rose 7.1 percent to 1.95 million and were 5.4 percent higher than July of last year. But in the West, sales slipped 1.7 percent in July to 1.13 million but were 1.8 percent above a year ago.
Yun says he is encouraged by the positive data. “A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he says. First-time homebuyers were responsible for 30 percent of home purchases in July.